But the governor says there's no time in the Legislature's one-month February session to tackle such a controversial issue. Instead, he says he'll invite lawyers, doctors and others to the governor's mansion to hammer out a compromise for the Legislature to consider in 2013.

The dispute brings an additional roadblock for one of Kitzhaber's top priorities. His proposal would change Oregon's version of Medicaid to improve coordination of health care and focus on preventing expensive hospital stays. Lawmakers are counting on it saving millions to help balance the budget.

Democrats control the Senate with a slim 16-14 margin, so Kitzhaber doesn't need Republican support unless Democrats defect.